Penny stock crash: Malaysian businessman John Soh Chee Wen aiding in probe

Malaysian businessman John Soh Chee Wen.
Malaysian businessman John Soh Chee Wen. PHOTO:GUANG MING DAILY

Malaysian businessman John Soh Chee Wen is assisting the Commercial Affairs Department (CAD) in investigations into Singapore's penny stock crash of October 2013.

Mr Soh, 57, has not been charged.

A public court notice shows that a criminal motion hearing is scheduled in the High Court today before Judge of Appeal Chao Hick Tin.

Mr Soh is being represented by senior counsel Tan Chee Meng, deputy chairman of WongPartnership.

Criminal motions include applications to vary the bail sum or to transfer a case from the State Courts to the High Court, for example.

In April 2014, the CAD and the Monetary Authority of Singapore launched a joint probe into the crash that wiped out $8 billion in market value in just three days.

The probe centres on possible violations of the Securities and Futures Act. They stem from alleged trading irregularities in the shares of Blumont Group, LionGold Corp and Asiasons Capital. The latter is now called Attilan Group.

The CAD, in its 2014 annual report issued in August last year, described its efforts as the "biggest securities fraud investigation to date".

Mr Soh was formerly a top member of the Malaysian Chinese Association and hails from Selangor.

He rose to prominence in the 1990s with deals involving Malaysia-listed firms. Several of these later failed in the Asian financial crisis.

His fortunes took a further dive in 2007 when he was fined the maximum RM6 million, after pleading guilty to two charges of conspiracy to provide false information to the Kuala Lumpur stock exchange.

The three penny stocks had surged by more than 800 per cent in less than nine months before plunging by between 91 per cent and 96 per cent in October 2013, wiping out $8 billion in value in three days.

Market confidence was badly bruised, with a more than 60 per cent fall in the average daily traded volume on the Singapore Exchange (SGX) in the 12 months after September 2013, according to SGX data.

The trading value over the same period fell by more than 30 per cent, as the crash made investors more cautious, particularly about small and medium-sized firms.

Since the probe began into several of these mainboard-listed firms and several key executives, a number have suffered hefty financial losses and issued profit warnings.

The meltdown is partly behind regulators' recent moves to propose tighter trading rules and add circuit breakers, among other things, to protect investors from excessive price swings and speculation.

The CAD also said in its annual report: "We are acutely aware of the impact on investor confidence and the need to resolve this quickly and effectively."

It added that "the joint team is working tirelessly to get to the bottom of the matter" so as "to bring those responsible to justice".

The CAD declined to comment yesterday.

A version of this article appeared in the print edition of The Straits Times on January 27, 2016, with the headline 'Penny stock crash: Malaysian businessman aiding in probe'. Print Edition | Subscribe